A new construction project in the Great Smoky Mountains continues to be the best investment option!
With cabin values soaring and record-breaking rental revenue numbers, the strongest use of your investment dollars is to build the perfect cabin.
This last year we saw some pretty challenging results from Covid in terms of supply and demand driving cost and driving delays. However, we believe the worst is behind us and most of our contractors believe that the spike of material cost that has occurred will continue going down the remaining of the year. But even with the higher cost and obstacles, you can purchase a new construction cabin for less than market value.
Inventory will continue to be down this year so those of you who have been afraid to get your feet wet, I would encourage you to get comfortable with the process of building! It will be a tremendous way to build the strongest Cabin inventory for the strongest rental revenue.
Here are the main concerns you need to address if you’re looking for future income.
1) make sure your floor plan is as strong as possible for your purposes. Make sure it includes the amenities that renters love. Don’t just build something new, but include a generous game room, theater, an indoor pool, a putt putt course, bar seating, as well as, a dining room, lofts with extra sleeping, and bunk nooks.
2) get a great loan… there are several options; a construction loan that turns into a perm loan as soon as the cabin is completed is a good one. This saves a doubling up of closing costs. But don’t hesitate to check out creative options; there are loans that lock the final interest-rate which continues to be very low – making these properties cash flow very strong. Depending on your financials, there are lenders who will consider the income from the cabin and the qualification process.
3) choose a strong developer/contractor…Check out their previous construction projects. Their work should speak for itself. Be suspicious of a contractor who is anxious to start right away. This is a tremendous red flag right now though it would be very tempting. All quality contractors are committed, and you will need to get in line. However, don’t use a contractor who is overcommitted and cannot place your project on his calendar with certainty.
4) having a cabin built is not the same as negotiating for an already standing Cabin that is on the market for sale. Do not expect to negotiate off the price. The builder’s profit is generally 10 to 15%… So, anything negotiated off the purchase price is going to come out of his pocket and make you a lower priority. Not a place you want cost savings. You do not want your builder working for free. He or she needs to be motivated and positively disposed towards your project. That’s a whole article in itself! For another day…
5) make selections early! Go ahead and decide what you’re building, select as much as possible before you break ground. This will make your project more efficient; thereby saving money. The time wasted waiting on things to be ordered and communicating to a builder selection can be a nightmare. Totally avoidable if you make your selections when you contract.
I hope these tips have been helpful. We are here to guide you in the process.
We are going to begin summer new construction tours every Saturday from 10 to 12 o’clock; we hope you join us for one!
We are representing two new projects you may want to consider: Lake Haven Resort and Sequoia Heights resort. Lake Haven is a mountain-lake project and Sequoia is in the heart of Pigeon Forge.
Look forward to taking you on a tour!!
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